US Commerce Secretary Disregards Dockworkers Strike
Recently, US Commerce Secretary Raimondo was asked by CNBC about the potential consequences if a dockworkers strike were to last longer than a week. This query was in reference to the impending ILA union action. Despite the fact that logistics experts warn that such a strike could be disastrous for US and global logistics, Secretary Raimondo responded, "I have not been very focused on that." It appears that many in the markets share this lack of focus.
Global Market Focus Shifts
There are numerous issues that the markets seem to be overlooking. For instance, Japanese stocks plummeted by 4.8% as China's stocks rose by 8.1%. Neither market seems to be paying attention to the real politics at play. In Japan, the new hawkish Prime Minister Ishiba, a former defense minister, is advocating for an Asian NATO with nuclear capabilities. However, the markets are interpreting 'hawk' to mean on rates, despite his recent call for loose monetary policy and an upcoming snap election on October 27.
Conflicting Fed Talk
Meanwhile, the Federal Reserve's discourse is sending mixed signals. Chicago Fed President Goolsbee is advocating for rate cuts, a stance that is being applauded by markets fearful of a politicized Fed. However, Fed Chair Powell has a different view. He believes that if the economy performs as expected, there will only be two more 25bps cuts this year. He also stated that the labor market is solid and that policy will gradually shift toward a more neutral stance.
Israel's Limited Ground Invasion of Lebanon
In other news, Israel has initiated a limited ground invasion of Lebanon to eliminate Hezbollah tunnels. This move is intended to allow tens of thousands of displaced Israelis to return home. Prime Minister Netanyahu has also strengthened his coalition with a right-wing party and reiterated his desire for peace once Tehran's regime is changed, which he believes may happen sooner than people think.
Far-Right Government Election Gain in Austria
Europe has witnessed another far-right government election gain, this time in Austria. The Freedom Party secured 28.9% of the vote, making it the first party of its kind to win the most seats in parliament since World War II. However, the far left only managed to gain 2.4% of the vote. Despite this, the combined 'populism scorecard' is around 1 in 3 voters, indicating a significant shift in political sentiment.
US Election Uncertainty
With the US election looming, markets are hoping that the lack of focus will continue. However, current opinion polls suggest that a Trump win is still likely, a scenario that markets do not appear to be pricing in. There is also the potential for a contested election, which could lead to a 50bps Fed cut in November.
October Surprise in US Election
As the election draws near, the traditional 'October Surprise' is expected to stir up the political landscape. The upcoming vice-presidential debate between Walz and Vance is already being overshadowed by allegations of CCP influence involving Governor Walz. It is hoped that the debate will provide clearer insights into the economic policies of both camps.
Bottom Line
The lack of focus on critical issues by key figures and the market is concerning. From potential labor strikes to political shifts and election uncertainties, these matters warrant attention and consideration. What are your thoughts on these issues? Do you believe the lack of focus is justified or is it a cause for concern? Share your thoughts and engage in the discussion. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
